NEW YORK-American Cellular Corp., a joint venture between AT&T Corp. and Dobson Communications, received a Ba3 rating from Moody’s Investor Service for its $1.75 billion senior secured credit facilities. The senior implied rating is also Ba3, and the issuer rating is B1.
The ratings reflect the high leverage of the company and the competitive nature of the wireless industry.
Moody’s noted the ratings show the stable nature of the company’s cash flows from its rural and suburban cellular clusters, the expected continued growth in local service revenue, the company’s modest capital requirements that should allow for rapid generation of free cash flow to reduce debt, as well as the strategic 50-percent ownership of American Cellular by AT&T that should benefit the company both operationally and strategically.
Moody’s went on to say that leverage at American Cellular will be higher initially than at comparable rural cellular carriers, and certainly higher than would normally be tolerated at this rating level.
However, Moody’s noted it was comfortable with the company’s good performance over the past 18 months and the prospects for this to continue in the future.
